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Cuba starts process of reform in 2010

11-25-2010 14:37 BJT

HAVANA, Nov. 23 (Xinhua) -- The Cuban government launched an "unavoidable" process of economic reform in 2010 involving a shift away from state-run to private business, with the goal of "updating" the socialist model.

The authorities said reform was an economic "update" plan for the island country, based on the ideological premise that "only socialism is capable of overcoming difficulties and preserving the achievements of the Revolution."

Some of the economic reform proposals that have been implemented include adjusting state spending according to its income, due to the difficult economic situation in the country, the world economic crisis, the U.S. embargo, the 2008 hurricanes and the low productivity of a large number of state-run companies.

Cuban leader Raul Castro said last April the changes would "set the foundation for irreversibility and development of Cuban socialism."

Castro confirmed the nation had an excess of workers, estimated at more than a million of the five million people that make up the country's workforce.

A few days after this speech at the Congress of the Union of Young Communists, he presented new possibilities in "work on your own" with plans to rent taxis to drivers and hand over the management of hairdressers and barber shops to the workers.

Following this decision, those workers stopped receiving a monthly salary from government and earned their income directly from payments from their clients. They also now pay taxes and contribute to social security.

"Work on your own" was approved for 115 trades in 1993, as part of the reform intended to overcome the economic crisis the island country faced following the disintegration of the former Soviet Union.

However, the concession of licenses had been frozen until the worst of the crisis is overcome.

Following the closure of several businesses due to illegal purchase of goods and tax evasion at the end of 2009, there were about 143,000 workers working on their own.

Last August, during the first annual session of Parliament, the leader announced the expansion of "work on your own," the possibility of contracting laborers, and the commercialization of some areas to reduce state employment.

Castro said the "bulky" state-run sector of the economy would be reduced, and that "as another alternative to employment for surplus workers," an agreement was made "to expand work on your own."

One month later, the government authorized the opening of small businesses in 178 activities, with the goal of allowing the private sector of the economy to absorb most of the half-million jobs in state-run enterprises that will be eliminated next March, in the first stage of a plan to reduce staff in departments that are "considerably bulky."

They also agreed to apply a tributary regimen for those who work on their own, which would "respond" to the current economic context and "guarantee" contribution to social security.

Castro confirmed that the government wanted to overcome the "paternalist focus that does not stimulate the need to work in order to live, and at the same time reduce unproductive spending."

He said that we "must permanently erase the notion that Cuba is the only country in the world in which one can live without working," although he specified that "no one will be abandoned due to their luck."

In mid-November, the Cuban leader called for celebration of the 6th Congress of the Communist Party in April 2011, announcing the meeting would focus on the economic situation of the country.

The discussion will be based on the "Guidelines Project of Economic and Social Policy of the Party and the Revolution," which will be released to the public for debate from December 1 to February 28.

The document tries to work towards a greater efficiency in primary sectors like agriculture and in investments, so that the economy can really become productive.

In this sense, priority will be given to investments that generate savings by substituting imports and increasing exports, and in which the money invested can be quickly recovered.

As part of the new economic policy, some of the immediate goals involve decreasing distribution of money through an efficient replacement of foreign-acquired products, recovering a productive capacity, and increasing management efficiency.

Another proposal is to decrease the external imbalance and recover the payment capacity, parallel to a reduction in spending, including spending in social sectors like education and health (free services), with the goal of advancing towards monetary unification.

Some Cuban intellectuals, like economist Omar Perez Villanueva, consider the success of China and Vietnam as valid examples for this socialist country in terms of attracting foreign investments to stimulate economic growth.

While the country rids itself of several obsolete practices, the press affirms that the current debate in the country is "shouting for" a change of mentality in everyone on every level, and the authorities have pointed out that "in this process the one who decides is the people."

"There is no reform, it is an update of the economic model. No one thinks that we are going to turn over property: we are going to administer it in another way," explained Marino Murillo Jorge, Cuban Economic and Planning Minister.

 

Editor:Zhang Jingya |Source: Xinhua

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